Posts Tagged ‘representative payee’

At Fleming & Curti, PLC, we do not handle divorce cases. From time to time, though, a divorce case raises the same kinds of issues that we see in the guardianship, conservatorship and probate cases we do handle.

A recent Arizona Court of Appeals decision is a case in point. It involves the divorce of a Navajo County, Arizona, couple, Donna and Edward. When the couple divorced in 2009, Donna was awarded custody of their four children. Edward was ordered to pay child support.

When Edward began collecting Social Security benefits on his own account, the children were entitled to receive $362 each per month. Social Security named Edward as “representative payee,” which meant that the children’s checks were made payable to him and he was required to account to the Social Security Administration each year.

Donna filed a petition with the divorce court to modify the support and visitation orders. She also alleged that Edward had been taking the children’s Social Security money and spending it as he saw fit — and that she should be the representative payee since she had sole custody of the children. At some point she apparently applied to Social Security to become the payee, and the payments were switched to her name. Still, she wanted Edward to account for — and return — the payments received for a nine month period starting right after the divorce.

The judge in the divorce court agreed, and entered a judgment against Edward (and in favor of Donna) for the amount of the payments he found to have been “misappropriated.” The judge also held Edward in contempt for failing or refusing to turn over the Social Security.

Edward appealed, and the Arizona Court of Appeals briefly reviewed the interrelationship of Social Security, state law and state courts. According to the appellate judges, Arizona state courts do not have any jurisdiction to review the management of Social Security payments made to a representative payee. The proper place to challenge Edward’s use (or possible misuse) of those funds was before the Social Security Administration itself. Peace v. Peace, May 8, 2014.

The Arizona appellate court, incidentally, was very candid in its assessment of the legal principles. It noted that some state courts (not in Arizona) have decided that they do have jurisdiction over Social Security representative payees, and others have held that state courts are preempted by federal law from intervening. The Arizona opinion specifically mentions a minority opinion in a 2013 Vermont case, LaMothe v. LeBlanc, which reviewed the holdings in several states — including Alaska, Maine, North Carolina, Ohio, Iowa and Tennessee.

What is the significance of the recent Arizona holding in probate court? An analogous situation arises frequently. Suppose that a parent with a disability receives Social Security benefits, and that his or her minor child is entitled to Social Security benefits. Now suppose that a grandparent or other family member has become guardian for the child, or that a professional fiduciary has become conservator to handle a personal injury settlement. Can the Arizona probate court order the parent to turn over Social Security payments, or to prove that they were expended for the child’s benefit, or even to relinquish authority as representative payee? The Peace decision would seem to say that none of those decisions are within the purview of the probate court — the guardian’s, conservator’s or custodial parent’s dispute is with Social Security, not the state courts.

Question: What is the difference between guardianship, conservatorship, power of attorney and representative payee? Which is “better” for my clients and family members?

Answer: Guardianship and conservatorship are court proceedings. The former gives the guardian power over health care and placement decisions, the latter over financial matters. Both require that the subject of the proceeding be incapacitated or unable to handle matters without assistance. Neither can be done voluntarily, in the sense of signing up for guardianship or conservatorship (though the subject of the proceedings may choose not to object).

Power of attorney is the simple act of appointing someone else to handle one’s financial and/or medical matters. By definition, one must be competent to execute a power of attorney, and must be willing to delegate authority. By signing a power of attorney, one does not relinquish any control but merely designates another with overlapping authority; guardianship and conservatorship transfer authority to the guardian or conservator.

Representative payee is a designation given by some pension and other benefits programs. The most familiar of these, of course, is the Social Security Administration, which may determine that a beneficiary is unable to handle his or her own checks based on a doctor’s letter. “Rep payee” status does not require a court proceeding, and is therefore less intrusive and expensive.

Which of these choices is “better” for someone with diminished capacity usually makes no difference. Competent people can not have guardians or conservators appointed, and incompetent patients can not execute powers of attorney. Representative payee status is usually preferable to conservatorship, but will not work for bank accounts or other financial matters; representative payees are also not bonded or required to report in as much detail as conservators.

Send your legal questions to us for future discussion in Elder Law Issues.

Wrong Medications Cost Seniors Billions

Results of a study on elder care conducted by the U.S. General Accounting Office show that 17.5% of older Americans are prescribed inappropriate or questionable medications resulting in more than $20 billion of unnecessary medical costs. The GAO also said that older Americans are six times more likely to be prescribed the wrong medication than are their younger counterparts, and that 3% of all hospitalizations result from adverse drug effects.

The study concluded the reason for this phenomenon is that doctors in every field of specialization see some elderly patients on a regular basis, but are not necessarily versed in the unique needs of the elderly. The report calls for education and awareness of the specific needs of older Americans through:

counseling for patients about the proper drug usage;

managed care systems and primary physicians who monitor drugs prescribed by others treating the same patient; and